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twenty-five per cent. of the total fair taxation valuation of all property in the island. In addition to this, there is a large indebtedness not secured by mortgage on real estate.

They found also that, prior to the war with Spain, the exports from Puerto Rico were sold chiefly in Spain and Cuba, the ports of which she could enter with her products upon payment of only a very light duty. But when the treaty of peace was concluded the ports of both Spain and Cuba were closed against Puerto Rico, except only on payment of a high rate of duty; so that practically her products were barred out of these markets; and our tariff duties are so high that the same was true as to our market. This, of itself, was enough to paralyze the industries of the island, and did paralyze them. But, in addition to this, there came, on the 8th of August last, a hurricane of unprecedented violence, by which the whole island suffered severely, particularly the coffee plantations. The testimony produced before the Congressional committees was to the effect that the coffee plantations were practically destroyed. According to this testimony, the crop of coffee for this year will not exceed ten per cent. of the average annual crop. When it is remembered that coffee is the principal crop of the island, constituting about seven-ninths of its export, it will be seen how disastrous the results of the hurricane were. It was further shown that, in many of the municipalities of the island, it would be impossible to make collection of any direct property taxes at all.

All can see from this glimpse of the situation that a direct tax on property, which is the usual way of raising revenue to defray the expenses of local governments, would be a great and impossible burden for these people, even if it did not exceed one per cent. But the testimony is that the necessary expenditures of the government that we are instituting will amount, according to the most conservative estimate, to not less than $3,000,000 annually, while there should be an additional million added for municipal governments. It was more than $6,000,000 under Spanish rule, and nothing was done for schools, roads and other public improvements.

This expenditure for the insular government comprehends the inauguration of a system of education, the building of school houses, etc., and also the construction of roads, bridges and other public improvements, without which it is impossible to restore VOL. CLXX.-No. 521.


prosperity to the island and to institute any substantial progress for the people.

But to raise this amount of revenue ($4,000,000) upon a hundred millions of tax valuation would mean a tax rate of four per cent. per annum. That would be a ruinous rate to be imposed upon even the most prosperous State in the Union. It was because of this fact that, when the subject was brought before the Senate Committee on Pacific Islands and Puerto Rico, it was seen that some other way must be found to raise revenues for Puerto Rico than the usual way-by imposing taxes directly on property. In every other Territory that we have ever had since the beginning of the Government, the revenues have been raised, for local purposes, by direct taxation of property, and in every such Territory the people have been required to pay internal revenue taxes besides, and where the Territory had ports of entry, as Florida, Louisiana, Washington and Oregon had, the full tariff rates have been imposed. But in all cases, without an exception, the internal revenue taxes and the tariff duties so collected have been paid into the national Treasury at Washington, for the common benefit of the whole country. In addition, therefore, to all the internal revenue taxes and tariff duties which the people of the Territories have heretofore been required to pay, they have had also to pay whatever direct taxes upon the property were necessary to furnish a sufficient revenue for their Territorial and municipal governments.

For the reasons given, we recommended a departure from that rule in this instance, and provided for it by the provisions of the bill reported to the Senate. We provided that full tariff rates should be collected on all imports into Puerto Rico from countries other than the United States, and that full internal revenue taxes should be collected within the island, the same as elsewhere in the United States; but that all these tariff duties and internal revenue taxes so collected should be paid, not into the national Treasury at Washington, but into the insular treasury of Puerto Rico, for the sole and exclusive benefit of the government of the island; all for the sole purpose of exempting that people from direct taxation on their property which would otherwise be necessary, and, for the reasons given, ruinous and impossible.

But, according to the estimates furnished, not more than about $2,000,000 could be raised in this way, leaving a deficit of about

$1,000,000 to meet the necessary expenses of the insular government. To meet this deficit, it was then further provided that there should be, until March 1, 1902, a tariff of twenty-five per cent.afterward changed to fifteen per cent. of the regular rates, to correspond with the action of the House-upon commerce between the United States and Puerto Rico. But it was further provided that all this tax, both that which will be collected in Puerto Rico and that which will be collected in the United States, should go to the benefit of the Puerto Rican government. In this way it was hoped to raise a revenue which could not, without the greatest hardships -if possible at all-be raised by direct taxation.

In other words, the provision of the bill which has excited so much criticism was but a part of a general scheme the sole purpose of which was a generous exemption, at the expense of the whole nation, of the people of Puerto Rico from the burdens of direct taxation, which have always been, and are now, imposed on all the other people of the United States, in both States and Territories alike.

It will be seen from this that the provision was not conceived in a spirit of illiberality or injustice, but in a spirit of mercy and generosity, with the idea that it would be helpful, as, if it should be adopted, it clearly will be. If there be any injustice involved, it is to the people of the United States, at whose expense all this unprecedented favor is shown.

It was well understood by the Committee, when these provisions were adopted, that important questions as to the power of Congress to so legislate would be raised. While the Committee did not adopt any of these provisions for the purpose of raising these questions, yet a majority of the Committee, at least, were of the opinion that this incidental result of the bill need not be evaded, but rather, on the contrary, should be gladly met.

When the treaty of peace came before the Senate for ratification, it precipitated a great debate. The questions were, first, whether or not our Government had any power to acquire territory in the way proposed; in the second place, whether or not we had power, when it was so acquired, to hold it unaccompanied by present intention of making it ultimately a State; and, in the third place, whether or not, if we acquired and held it, we had the power to govern it, and, if we had, how-whether as a possession or dependency, a district, a territory, or otherwise; and

whether, no matter what kind of a political subdivision we called it, the government of it should be restricted and restrained by the provisions and limitations of the Constitution, or whether Congress was free to govern such territory without such limitations and restraints.

That debate, in one form and another, has been going on ever since. It has now, however, by the march of events and by the force of circumstances, come to be plainly established and conceded on every hand that our Government does possess equal sovereign power with every other sovereign nation of the earth to acquire territory by discovery, treaty, or conquest, and to hold such territory at its pleasure, and, of course, as a corollary to this, that when it holds it must govern such territory. But the question remains as to how such territory shall be governed, whether subject to the restraints and limitations of the Constitution, or free therefrom. Republicans generally are of the opinion that the Constitution is the organic law for the States of the Union alone, unless, by Congressional action, it be extended and applied to Territories outside of the Union. All the territory that we have heretofore acquired, excepting only Alaska, has come to us under treaties that stipulated that it should be, in due time, incorporated into the Union, and that the inhabitants of it should be admitted to the privileges and immunities guaranteed by the Constitution to citizens of the United States; and, by Congressional action, the Constitution and all laws of the United States, not locally inapplicable, have been expressly extended to all the Territories of the United States that we had prior to the Spanish War.

But, by the treaty of peace with Spain, we took possession of these islands without a stipulation that they and their inhabitants should be incorporated into the United States, but with a stipulation to the effect, on the contrary, that the Congress should determine the civil and political status of the inhabitants of the island.

A treaty is a part of the supreme law of the land. This provision of this treaty was clearly within the scope of the treatymaking power. It is, therefore, binding on all concerned. Under this provision of the treaty, the Congress was, therefore, invested with full power to legislate with respect to these islands and their inhabitants in any way it might see fit, on all subjects affecting

their civil and political status, restrained only by the general spirit of our institutions. The Congress is given the same power by the Constitution itself, for it invests the Congress with power to "dispose of and make all needful rules and regulations respecting the territory and other property belonging to the United States."

The Supreme Court has repeatedly held that, under this power given by the Constitution, Congress can legislate as it may deem advisable with respect to the Territories, and not subject to the limitations and restraints of the Constitution, except only as the spirit of our institutions has been formulated in the Bill of Rights.

Under these two powers, therefore, Congress is at liberty to make any provisions it may see fit to make with respect to Puerto Rico and the Philippine Islands that have relation to the civil and political status of their inhabitants. It may make them citizens or withhold citizenship; it may impose equal or unequal taxation, as compared with the rest of the United States; and it may, as there is occasion to do in this instance with respect to coffee, impose a duty upon the importation of coffee into Puerto Rico for the protection of the coffee industry there, while, under the general tariff laws of the United States, at all the ports of the United States, coffee is admitted free; and it may—as many of us believe, and as the bill provides-impose a duty upon products imported from the United States into Puerto Rico or from Puerto Rico into the United States.

But, upon this question of power, sharp differences of opinion. exist, and, after two years of debate, in which all the judicial decisions that bear on the subject have been carefully analyzed and elaborately discussed, men find themselves more than ever confirmed in their respective views. It is contended, on the one hand, that the Constitution extends itself, ex proprio vigore, to all territory acquired by the United States at the moment of its acquisition. "The Constitution follows the flag," says Senator Jones, the Democratic leader in the Senate. This is denied, on the other hand. Until the Supreme Court of the United States passes upon it, the proposition will remain controverted. It is fortunate, therefore, that the necessities of Puerto Rico can best be met by provisions that raise all these questions; and the importance of this is in the fact that, next after Puerto Rico, we will be called upon to provide civil government for the Philippines.

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